Nevada County residents watch Nevada City, Grass Valley sales taxes

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One week after Grass Valley and Nevada City’s new sales taxes went in effect, residents who have those towns’ zip codes but live outside their municipal borders are cautioning their neighbors to keep a close on eye their receipts.

“If you are living outside the city limits, be watchful,” said Donald Sauer, a Nevada County resident with a Nevada City zip code.

Sauer claims he was charged Nevada City’s new 8.5 percent sales tax rate when shopping for auto parts online April 1, even though that transaction and use tax is only supposed to apply to purchases made within city limits or to large-ticket items, such as cars, that are registered or delivered to residences within the city.

“That is one of the challenges is the geographic boundary instead of a postal boundary,” said Grass Valley City Manager Dan Holler. “If the point of the sale is in the city, that is not an issue. It is when someone buys something out town and the address is a (Grass Valley or Nevada City) zip code that it can raise a problem.”

Grass Valley’s new rate is 8.125 percent, up from 7.625 percent, which is the rate throughout unincorporated Nevada County.

Holler noted that the city had received no complaints of mischarged sales taxes since the new tax rate took effect, but Tina Vernon, Nevada County’s treasurer-tax collector, said her office has received a few complaints in both new taxes’ first week, even though her office has nothing to do with sales taxes.

“We are getting calls from tax payers because they don’t know who else to call,” Vernon said.

As a policy, it is the responsibility of the retailer to ensure a customer is getting charged the correct sales tax, according to the California Board of Equalization, which is the agency that oversees such taxes.

However, as county resident Marcy Snead noted, in reality, a customer needs to be vigilant.

“If they don’t cover you, it’s up to you to report it. (But) most people don’t pay attention to the sales tax because it is assumed,” Snead said. “I make sure I shop in areas where the sales tax is lower.”

If a customer notices an inappropriate tax rate, a Board of Equalization spokesman said it is up to the retailer to reimburse the customer and file it with the state agency. In Sauer’s case, Nevada City has paperwork available on its website to file a complaint, a practice adopted when the city passed a pervious sales tax in 2006.

When Measure S passed, Olson said the city got a lot of phone calls about people with Nevada City zip codes who didn’t live in the city limits who were getting charged for the tax. In response, the board mapped out all the addresses for the BOE and made the information available to retailers.

“I don’t have a lot of concern about it at this time and because we worked with the state BOE about the boundaries and actual addresses,” Olson said. “The vender can go on and look and see for themselves … All the information about our city and our tax rate is out there.”

While local, county and even regional businesses may understand the various different tax rates of potential customers, where it gets tricky, Snead said, is in online purchases.

“What they have done is taken all the sales tax rates and averaged it,” Snead said of online businesses. “So that sales tax percentage they used was an averaged amount. Because they don’t know exactly where you live.”

Sauer said it is all about vigilance.

“It’s in on the onus of the person spending the money to look at it and make sure you aren’t being charged when you shouldn’t be,” Olson said.

City’s tax revenue expenditures

While both measures will be allocated to the cities’ general funds and, therefore, qualified as general taxes that required simply voter majorities, both measures garnered large enough margins to have passed the more stringent standards of a two-thirds majority special tax.

Revenues are not expected to come in until the end of June, yet both cities outlined where the money would go in justifying their need to voters.

Expenditures of those added revenues is ultimately up to the elected city council members of each city, but both towns promised accountability of those expenses as selling points to voters.

Nevada City officials have not yet scheduled a public meeting to discuss the proposed expenditures with residents, but the proposed allocations of the approximately $390,000 in added annual revenue are available on the city’s website for review.

The largest expenditure is building a $650,000 general fund reserve. As part of the city’s strategic goal to achieve financial sustainability, it has long aimed to have a minimum 8 percent general fund reserve equating to approximately $325,000 with a suggested 16 percent reserve or two months of the general fund operating budget, according to the proposal.

The city also proposes eliminating furloughed Fridays, tackling deferred maintenance projects and replacing outdated equipment, software and vehicles. While the city is also proposing hiring personnel in public works, parks and recreation, perhaps the most notable proposals are to upgrade from part-time leaders of some of the city’s most prominent positions. Currently the city’s police chief, city manager and consulting attorney are part-time retirees.

Similarly, Grass Valley told voters that without the $2.4 million brought in annually from Measure N, police officers’ and fire fighters’ ability to respond to incidents would be diminished because of staff shortages, and roads would not be attended to as vigilantly. However, with the revenue the city would hire more officers and prioritize street maintenance.

Another selling point was the inclusion of an advisory group charged with reviewing and advising the city’s expenditures of the tax revenue. With members appointed in February, the group will also advise for the abolition of the tax measure should the city’s tax revenues return to pre-recession levels — another of the selling points.